Cookies

We use cookies to customise content for your subscription and for analytics.
If you continue to browse the International Law Office website, we will assume you are happy to receive all of our cookies. For further information please read our Cookie Policy.

Your Subscription

We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.

Supreme Court rules on use and functions of trademark

Newsletters

Primagaz, a company which sells gas in tanks bearing the trademark PRIMAGAZ, let a 1,200-litre gas tank to a customer based on an agreement that the gas tank could be used for Primagaz gas only. However, the customer allowed a third party to fill the tank with a different brand's gas.

Primagaz ordered the third party not to refill the Primagaz tank with non-Primagaz gas, claiming that this constituted trademark infringement. The third party did not comply with the request. Thus, Primagaz issued a writ requesting the court to order the third party to stop all infringements of the PRIMAGAZ mark, including refilling the 1,200-litre gas tank.

First-instance court

The third party defended itself by referring to the European Court of Justice (ECJ) in Viking Gas v Kosan Gas (C‑46/10) and Winters v Red Bull (C-119/10).

Viking Gas
In Viking Gas the ECJ interpreted Articles 5 and 7 of the EU Trademark Directive (89/104/EEC). It found that the holder of an exclusive licence for the use of composite gas bottles intended for reuse – whose shape is protected as a three-dimensional mark and to which the holder has affixed its own name and logo which are registered trademarks – cannot prevent those bottles, once purchased and used, from being exchanged by a third party on payment for composite bottles filled with different gas, unless the licence holder has a legitimate reason for doing so.

According to the Primagaz agreement, the gas tanks were let to customers for the purpose of storing Primagaz gas and the tank remained Primagaz property, which was not the case in Viking Gas. In line with the judgment of the Benelux Court of Justice in Shell v Wallhout (December 20 1993) the court opined that, by refilling Primagaz tanks carrying the PRIMAGAZ mark, the third party used the PRIMAGAZ mark for the same goods as those for which the mark was registered. It found that Primagaz could oppose the refilling of the Primagaz tank with third-party gas. Contrary to Viking Gas, Primagaz did not hold rights to the shape of the tank.

Winters
In Winters the ECJ ruled that a supplier which (at the request of a third party) fills cans that bear a brand's marks with energy drinks, provides only the technical facilities to a third party. The court held that the signs were not used for identical or similar goods or services to those for which the Red Bull mark was registered.

In the case at hand the third party had not only provided the technical facilities necessary to enable a third party to supply the gas, but had also supplied the gas directly to the customers. The Winters judgment therefore did not apply.

Court of appeal

The court of appeal rejected the third party's appeal on similar grounds. The third party then appealed to the Supreme Court on issues of law.

Supreme Court

The third party appealed on the grounds that:

there was no proof of use of the PRIMAGAZ mark;

Primagaz's trademark rights were exhausted; and

the lack of additional labelling did not damage the quality and origin functions of the PRIMAGAZ mark.

The Supreme Court confirmed that both the first-instance court and the court of appeal had applied the cited ECJ judgments correctly.

Use of the mark
The Supreme Court held that where a party uses another's branded packaging for its own goods, it is the same as using the other party's trademark (Article 5(3) of the Trademark Directive). The fact that the case dealt with an immoveable gas tank rather than smaller gas bottles was inconsequential; the act of filling the tank constituted use of the mark in the course of trade. The third party had therefore used the PRIMAGAZ mark for commercial gain, as supported by Viking Gas.

The Supreme Court confirmed that the court of appeal had correctly found that the case did not warrant the application of Winters. In the case at hand, the third party had delivered goods that were identical to those for which Primagaz had registered its mark, while using the PRIMAGAZ mark.

Functions of a trademark
The Supreme Court upheld the court of appeal's finding that the origin function of the PRIMAGAZ mark had been affected. The third party did not provide any indication that the gas with which it filled the tank had originated from the third party rather than Primagaz. Thus, the public may have thought that the gas originated from Primagaz. Although this would not affect the customer which had ordered the gas, other parties may assume that the gas was Primagaz's.

Further, as Primagaz had no control over the quality of the gas or compliance with safety regulations, the quality function of its trademark may also have been compromised.

Exhaustion of rights
The Supreme Court found that Primagaz's rights had not been exhausted. The gas tank remained the property of Primagaz and, unlike the gas bottles in Viking Gas, the tank did not represent an independent economic value under trademark law. Further, the tank in question should be regarded only as packaging of the product for which the trademark was registered.

The Supreme Court observed that, regardless of whether Primagaz's mark was exhausted, it could still oppose the use of the mark if it had legitimate reasons for doing so – for example, where a third party has used a sign that is identical or similar to a trademark in a way which suggests that there is an economic link between the trademark owner and the third party. Where this is the case, it is important to avoid such an impression by labelling the goods correctly. As it was established that the third party had not done so, it could not argue on grounds of exhaustion.

Comment

This case is interesting regarding the effect on the functions of a trademark.

In order to avoid having an effect on the functions of a mark, a third party – that is the owner of neither the gas tank nor the trademark – should label the tank or bottle, stating that the gas in the tank does not originate from the owner of the mark on the tank.

While the decisive point in Viking Gas was that Kosan no longer owned the tank, and the case did therefore not deal with the issue of rented bottles or tanks, in that case the ECJ also made observations about the relevance of labelling. However, Viking did affix labels to Kosan gas bottles, to which the court did not object. It held that the labelling of the composite bottles and the circumstances in which they are exchanged must not lead the average consumer to consider that there is a connection between the two parties at issue, or that the gas used to refill those bottles had originated from Kosan.

The Supreme Court confirmed that there was an infringement in this case, particularly because no labels were used in order to avoid confusion as to the origin of the goods in question (in the particular situation that the shape of the container was not registered as a trademark). However, in line with Viking Gas, labels should not be misleading about the relationship between the trademark owner and the third party.

Interestingly, in Viking Gas the ECJ left room for the conclusion that there was infringement. It considered it necessary to take into account the practices in the relevant sector – specifically, whether consumers are accustomed to gas bottles being filled by other dealers. This suggests that if such practice is not commonplace, the functions of the trademark are more likely to be adversely affected.

Therefore, although the facts of the underlying case are surely not identical to Viking Gas, the Supreme Court's ruling is in line with Viking Gas. However, the use of labels to express that the gas in the container is from a different brand does not necessarily preclude any judgment of infringement. The individual circumstances of each case must be taken into account, such as whether consumers are accustomed to gas bottles being filled by other dealers.

The materials contained on this website are for general information purposes only and are subject to the disclaimer.

ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.